National house retrofit programme could save families over £400 per year and create 500,000 jobs
Four-year programme would create a new National Retrofitting taskforce to oversee investment of over £100 billion to retrofit nearly 9 million homes
07 July 2020
A plan to retrofit 8.7 million homes by 2023/24 could create over 500,000 new jobs, reduce household carbon emissions by 21% (19.23 MtCO2/year) by 2023/24 and cut household bills by an average of £418, according to new research published by the New Economics Foundation (NEF) today. A plan of this scale would constitute the largest infrastructure project the UK has seen – preventing thousands of premature deaths from cold homes and responding to the unemployment emergency from Covid-19.
NEF analysis of over 30 independent forecasts for the UK economy shows that GDP is set to be £136 billion (2019 prices, 6%) lower by the end of 2021 compared with pre-covid forecasts, unless government takes action now. However, a four-year programme to retrofit millions of UK homes could boost annual economic activity by £28 billion by 2021 compared to previous forecasts, and by £36 billion by 2023/24.
The proposals represent a genuine stimulus on the scale of a ‘New Deal’, spearheaded by a National Retrofitting Taskforce (NFT) responsible for ensuring every single UK home meets excellent energy efficient standards (Energy Performance Certificate rating “C”) by 2030. The research includes detailed economic modelling models the impact of the taskforce, finding that it would:
- Create jobs: 206,000 new full-time equivalent jobs in retrofitting industries would be created across all regions by the end of 2021. Taken together the direct and indirect employment impacts are therefore estimated to sustain an average of 515,000 new jobs between 2020 – 2024. New direct jobs created are worth 22% of all employment in construction between 2020 – 2024.
- Boost national income: The programme could boost annual economic activity by £27.96 billion (1.28%) by 2021 compared to previous forecasts, and by £36.34 billion (1.58) by 2023/24 (2019 prices).
- Cut household bills: There would be an average annual energy bill savings of around £418 for each home retrofitted by 2023/24.
- Cut emissions: Approximately 19.23MtCO2/year of emissions would be saved by 2023/24, or 21% of 2019 emissions from UK’s homes. This is a cumulative 40.9 MtCO2 by 2023/24.
To meet net-zero ambitions and tackle UK fuel poverty the report recommends the four-year programme has the following features, alongside the new National Retrofitting Taskforce:
- Public and private investment: Public capital investment of an average of £8.66bn per year for four years, much of it supporting low income households through grants. The cumulative government investment of £34.7 billion between 2020/21 and 2023/24 would unlock around £72.0 billion of private capital investment over the same period.
- Fiscal incentives: Tax changes in the form of a fiscally neutral, variable Stamp Duty Land Tax for more efficient homes, and equalising the VAT treatment for all retrofitting works at 5%, provided the whole property is brought above certain EPC thresholds (paid for elsewhere through higher taxes on the richest households). In addition, the package includes green mortgages, public-backed zero-interest loans and a boiler scrappage scheme, as incentives for ‘able to pay’ homeowners and landlords.
- Strengthened Building Regulations: This would include new mandatory energy efficiency works for ‘consequential improvements’, and support new business models, standards, supply chains and skills necessary to provide ‘whole-house retrofits’ for 8.7 million UK homes.
- Local engagement and delivery: A long-term Area-Based-Delivery approach, with Local Authorities playing a core role in informing and engaging communities through awareness raising initiatives, tackling fuel poverty, creating demand and growing local supply chains.
Hanna Wheatley, Senior Researcher at the New Economics Foundation, said:
“The green stimulus for housing that we have proposed would not only contribute to crisis recovery but would contribute to how the UK tackles climate change, poverty and the government’s levelling up agenda, creating a housing stock and economy fit for the century to come. In 2020, we cannot afford to recover from the recession in a way that doesn’t set us on a path towards ambitious climate goals, reduce inequality, and create a more inclusive and resilient society than we had before.”
Dr Donal Brown, research fellow at the University of Leeds and Sussex and Sustainability Director of Sustainable Design Collective, said:
“The case for housing retrofits was already clear before coronavirus. UK homes are responsible for around a fifth of total CO2 emissions, but we are still building homes in 2020 that will need to be retrofitted to meet our climate targets. The decarbonisation of homes and heat is an unavoidable part of our net-zero aspirations, and we must begin now to stand any chance of success.
The plan we propose in this report is expansive, representing a ‘New Deal’ scale re-employment and economic stimulus – echoing the UK’s post-war reconstruction and social housing programme. We are in a pivotal moment with both climate change and the current crisis, and we must begin a programme of work that tackles both.”
Contact
Sofie Jenkinson, 07981023031, sofie.jenkinson@neweconomics.org
Notes
The report ‘A green stimulus for housing’ will available at 00.01 Tuesday 7th July 2020 from https://neweconomics.org/2020/07/a‑green-stimulus-for-housing
The New Economics Foundation is a charitable think tank. We are wholly independent of political parties and committed to being transparent about how we are funded.
Housing stock analysis specialists Parity Projects undertook a Carbon Reduction Options for Housing Managers (CROHM) model assessment. This modelling is based on data from the English Housing Survey (EHS) data for 2016. The EHS was conducted for 12,292 properties in England but scaling figures were provided to allow for extrapolation to the whole of the UK, providing a dataset of 27,227,700 properties.
The CROHM whole house retrofit strategy includes targets for the three key types of measure. These targets are consistent with a 2050 ‘net-zero’ trajectory that would see the vast majority of homes meet EPC “C” or better by 2030, an additional widespread adoption of heat pumps, other low carbon heat sources and solar photovoltaic (PV) panels. Our near term 2023/24 targets for each type of measure are therefore:
- 10% (~38TWh) reduction in heat demand through energy efficiency improvements
- 87-fold increase in low carbon heat with around 10% of homes heated by heat pumps (Current number of low carbon heat systems assumed to be 78,791 Source: https://www.gov.uk/government/statistics/rhi-monthly-deployment-data-april-2020)
- 135% increase in microgeneration from renewables (7.4GW, mostly rooftop PV) (Current capacity is assumed to be 5.2GW
